U.S. Stocks Break Out of Malaise Amid Trade Hopes: Markets Wrap

This content was published on February 12, 2019 9:04 PMFeb 12, 2019 - 21:04

Pedestrians wait to cross a road in front of an electronic stock board outside a securities firm in Tokyo, Japan. Photographer: Kiyoshi Ota/Bloomberg

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U.S. stocks shook off their malaise Tuesday, boosted by optimism over trade talks and a tentative deal among American lawmakers to avert a government shutdown. Treasuries and the dollar edged lower.

After four sessions of losses or whisker-thin gains, the S&P 500 Index registered its biggest one-day increase this month, breaking through its 200-day moving average. The rally was broad-based: Materials stocks led the charge, but financials and the FAANG cohort of tech stocks also advanced, and energy companies gained as oil rebounded from a two-week low after Saudi Arabia pledged to deepen production cuts. The Dow Jones Industrial Average hit a 10-week high.

U.S. lawmakers said they have reached an “agreement in principle” on border security funding that would forestall a second shutdown. President Donald Trump said he’ll hold a meeting Tuesday to discuss the proposal. He said the preliminary agreement is “not doing the trick” but also said he has to study it and can add to it. On trade, the U.S. president said that he’s open to letting slide a March 1 deadline for China tariffs if a deal appears close.

“None of the worries that people had in the fourth quarter have really gone away,” said John Carey, managing director and portfolio manager at Amundi Pioneer Asset Management. “But people are maybe a little less concerned now and a little bit more positive about the ability of the economy to continue in a growth trajectory over the next couple of years, and that should be good for earnings.”

The prospect of a deal to keep the U.S. government open together with hints that Trump may reach an accord with China appear to be rekindling the rally in riskier assets after a turbo-charged start to the year showed signs of ebbing last week. A dovish shift by the world’s central banks has also helped, but at the same time has underscored the dilemma facing investors -- join the chase for late-cycle gains, or gird for a looming slowdown in growth.

Elsewhere, carmakers led the advance in the Stoxx Europe 600 Index, while West Texas intermediate crude futures and gold advanced. Emerging-market shares climbed and their currencies edged higher. The pound gained as U.K. Prime Minister Theresa May updated lawmakers on the progress of Brexit talks with the EU. The offshore yuan strengthened for the first time in five days.

Here are some key events coming up:

Chinese Vice Premier Liu He was expected to join U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin in high-level trade talks Thursday and Friday.

Earnings season continues with reports from companies including Cisco, Vivendi, Nvidia, Nestle, Coca-Cola and Credit Suisse.

Sweden’s Riksbank is expected to keep interest rates at minus 0.25 percent on Wednesday after the first increase in more than seven years in December.

Data Wednesday is expected to show U.S. consumer prices rose 0.1 percent in January, after falling 0.1 percent in December.

These are the main moves in markets:

Stocks

The S&P 500 Index climbed 1.3 percent, to a 10-week high, as of 4:01 p.m. New York time.